Second question, Should I go toward the top of my budget (qualified at $260,000 and currently looking at properties near that amount) at the start, or should I scale back and do a smaller property a little further away to test the waters and gain some experience with finding and managing tenants, but will allow me to easily afford the mortgage in the event of vacancy.Any advice, or criticism, would be greatly appreciated.

So, if your Self Directed IRA is 75% partner with another entity, then it must collect 75% of the profit (rental income, sold gains, etc), it must also contribute 75% of the expenses (rehab, insurance, taxes, etc).I am not sure about loaning to a partner. 

in addition to above, (good advice), you dont have to pay capital gains tax on this when you sell if it appreciated in value but only because you lived there. if you turn it into a rental, you will be on the hook for capital gains tax

There is so much knowledge you can gain cheap or free!

There are formulas and spreadsheets used to back out into the valuation price of a property and this does include pro forma rates, but the current leases you hold that gain you rents NOW is the major factor in calculating a price value. 

But the biggest issue I have with the stocks at the moment is the lack of passive income it creates (once you sell you stop earning money) and the inconsistency of the market as of late.

If you want to know why I am selling the rental, it is because this is the last year I can sell without having to pay taxes on capital gain (lived there 2 years out of the last 5), and because the value of the property has almost doubled since I bought it.

With flipping you also pay higher taxes since it's considered active income and with rental property you get a much smaller pay day, but you also pay little to no tax on the gains since it's passive and therefore have a number of tax advantages you can take. 

Numbers wise, it seems like there could be an investor looking for a moderate-term passive investment for 8-9%, but maybe I'm off base. 

He was showing huge gains to investors on paper, so he only really paid the early investors when they cashed out.